Item record still shows negative Quantity in Transit even there are no units in transit at the moment.

Thishappens when on Setup > Accounting > Accounting Preferences > OrderManagement Tab > Transfer Orders section > 'Use Item Cost as TransferCost' = F, however no Income Account is set on the Item Record.  When the UseItem Cost as Transfer Cost is unchecked, the system will use the Transfer Price instead of the Cost.

As per Field Level Help:
Use Item Cost as Transfer Cost – Choose one of thefollowing to set how the transfer price functions on item receipts:

Check this box to use the transfer price as a declared shipping valuefor reference only, such as for insurance or international shipping.

•        The transfer price is not a charge for thedestination location.

•        The transfer price does not affect the Cost ofGoods Sold (COGS) on transactions.

•        The transfer price defaults to show the value inthe Transfer Price field of item records. This value can be changed onindividual transfer orders.

Clear this box to use the transfer price shown on the transfer order asthe item cost on the item receipt.

•        Any difference between the actual cost and thetransfer price posts to a Gain/Loss account when the item is shipped.

•        The transfer price and the Gain/Loss account aredefined on each item record.

•        Partial fulfillment and receipt of transfer ordersis allowed, but you cannot receive more than you have fulfilled as of any date.For example, if you have fulfilled 10 widgets out of 20 on a transfer order,you cannot receive 12 widgets on that order.

•        The transfer price defaults to show the value inthe Transfer Price field of item records. This value can be changed onindividual transfer order.

 

GL Impact of the Item Fulfillmentduring Transfer Order process is different compare to the usual ItemFulfillment we do from the Sales Order. A possible profit might gain or lossmight occur during the Transfer Order process if 'Use Item Cost as Transfer Cost= F'. We account the profit or loss on the Income Account we set on the ItemRecord. Sometimes, Transfer Price is not always the same with the Item Costtherefore an Income Account is a requirement to account the difference.

To Illustrate:


Before Adding the Income Account

-- Transfer Order # 6:
* Transfer Price = 6.35973
* Item Cost = 6.38 (on the Item record > Inventory Tab > Average Cost =6.37730769)

-- Item Fulfillment #1851-2013 :
GL Impact of Item Fulfillment #1851-2013 before adding the Income Account
* No GL Impact
NOTE: Normal impact of Inventory In Transit is Debit (+0)

-- Item Receipt # 2556-2013 :
GL Impact of Item Receipt # 2556-2013 before adding the Income Account
* GL impact of Inventory In Transit is Credit (-34)

Since there Item Fulfillment #1851-2013 has no GL Impact, the Inventory Transitbalance is -34:
* Item Fulfillment  less Item Receipt=  Inventory in Transit Balance
* 0 - 34 = -34


After adding the Income Account

After adding the Income Account on the Item record and toggling the checkbox onthe Item Fulfillment record (uncheck then re-check), the Item Fulfillment hasnow GL Impact (+34). Therefore the balance is not 0.00
* Item Fulfillment less Item Receipt = Inventory in Transit Balance
* 34 - 34 = 0


To resolve:
1. Edit the Item record.
2. Enter Income Account under Accounting Tab.
3. Click Save.
4. Edit the Item Fulfillment.
5. Uncheck and re-check the Item.
6. Click Save.